Norfund invests in responsAbility Renewable Energy Holding in Africa

Hydro power plant at Mukungwa River in Rwanda under constuction. Egineers from rAREH explain some issues to the main contractor on site.

Through 14% ownership in rAREH, Norfund will contribute to the development and operation of several new small-scale renewable power plants in Africa. Other investors in rAREH are the Nordic Development Fund, Germany’s KfW and Switzerland’s responsAbility.

responsAbility Renewable Energy Holding (rAREH) aims to increase the renewable energy supply in Sub-Saharan Africa in a responsible way while generating attractive, long-term and stable cash flows across a diversified portfolio of renewable energy plants. rAREH was created in December 2013 with the goal to invest in and co-develop small- and medium-sized renewable energy projects up to 50 MW at various stages of the project life cycle, from development and construction to operations.

A particular focus will be on the development stage and to facilitate bankable, long-term power purchase agreements with national grid operators. The current portfolio comprises 14 projects totalling about 160 MW in development across the region. Many of these projects fall under a feed-in tariff (FIT) programme with the local utility company as an off-taker, whereby tariffs are fixed by the government. The offering encompasses equity and quasi-equity financing. rAREH is managed by responsAbility Investments AG, a Zurich-based asset manager.

rAREH has established a Nairobi-based implementation team combining experienced power project developers with young, talented local staff. This team is developing a pipeline of projects in various African markets. These are mostly run-of-the-river hydropower projects.

Pasi Hellman, Managing Director of NDF, says: “NDF is proud to support renewable energy supply in Sub-Saharan Africa by focusing on the equity niche markets. The demand for energy is a key development challenge in Africa, and this project addresses the issue in a socially and environmentally responsible way. We will help to implement the projects in the pipeline and act as a catalyser for further investments by other development finance institutions as well as private investors.”

Kjell Roland, CEO at Norfund, says: “Investing in clean energy projects is a high priority for Norfund as access to energy is crucial for development and poverty reduction. This investment will give Norfund a 14% share in responsAbility Renewable Energy Holding. In addition to being an investor, we are prepared to contribute with expertise by being an active owner and will appoint a qualified representative with board experience to the rAREH board.”

Rochus Mommartz, CEO at responsibility Investments, says: “Investment and co-development of renewable energy in small- and medium-sized projects – a niche area – in Sub-Saharan Africa are vital as they support local access to affordable clean energy and climate stability by reducing the carbon intensity of energy.”